“Despite economic hurdles, NHS and local government get a boost; other sectors brace for cuts.”

AS THE WELSH GOVERNMENT unveils its 2024-25 budget, a narrative of fiscal balancing emerges against a backdrop of economic challenges. The budget reveals a strategic emphasis on protecting crucial public services, particularly the NHS and local government, which have received a notable increase in funding. However, this move has necessitated reductions in other areas, illustrating the complex trade-offs in this period of financial austerity.

In a stark reflection of the current economic climate, the overall value of the Welsh budget has diminished by £1.3 billion since 2021. This decrease is attributed largely to a shortfall in expected funding from the UK Government, compounded by the pressures of inflation impacting public sector wages and energy costs. The NHS in Wales, a critical component of the Welsh public service sector, is a notable beneficiary in this budget, receiving an additional £450 million for 2024-25. This represents a significant 4% increase, far outpacing the less than 1% increase allocated to the NHS in England, and underscores the Welsh Government’s prioritization of healthcare even in times of financial stringency.

Local government, responsible for essential services such as schools, social care, and community infrastructure, is also set to benefit from a 3.1% increase in funding. This decision reaffirms the government’s commitment to maintaining vital community services. However, these funding boosts in certain areas have led to reductions in other departments. Rural Affairs is facing the most substantial cut, with a nearly 9% reduction in its budget. This will notably impact its rural investment program, although the Basic Payment Scheme for farmers is shielded from these cuts.

The Welsh Government has also chosen to maintain current income tax rates, considering the ongoing economic strain on its citizens. This decision reflects a sensitivity to the broader cost-of-living crisis affecting the population. Additionally, Finance Minister Rebecca Evans has indicated that the government might reevaluate charges for services such as NHS dental care and university tuition fees. These measures are being considered as potential sources of revenue in light of the budgetary constraints.

The UK Government, in its response, has emphasized the Welsh Government’s autonomy in its budgetary decisions, pointing out the role of the Barnett formula in ensuring fair funding. It also highlights the Welsh Government’s tax and borrowing powers, underscoring its ability to manage its financial resources.

Despite these financial challenges, the Welsh Government has reaffirmed its commitment to supporting those most affected by the cost-of-living crisis. This includes a substantial aid package for non-domestic ratepayers and the introduction of a new £20 million Future Proofing Fund for businesses. This budget, therefore, reflects a concerted effort by the Welsh Government to balance the need to safeguard essential public services with the realities of a constrained fiscal environment. It paints a picture of a government striving to make thoughtful, albeit difficult, choices in an era marked by economic uncertainty and austerity.

Rebecca Evans, Minister for Finance and Local Government, said: “In an incredibly tough financial situation, we’ve re-shaped our spending plans so we can protect the core, frontline public services provided by local authorities like schools and social care.

“As I explained yesterday, our overall funding settlement is not sufficient to meet all pressures. This has meant taking difficult decisions elsewhere in the budget to honour our commitment to councils last year of a 3.1% rise in their funding for next year.

“I appreciate the pressures local government is facing and recognise that demand for services, along with the recent very high rates of inflation, mean local government will still need to make difficult decisions on services, efficiencies, and council tax in setting their budgets.

 “We will continue to work closely together to face these shared challenges and strive to make the best use of the resources we have in order to make the most difference to the communities we serve.”